Speaking of a Stanley design, the resale of 1234 Howard #2C closed escrow on 5/19 with a reported contract price of $639,000, purchased for $587,000 in December 2007.
Yes, design matters (whether you like it or not).
∙ Not Louvered But Not Unloved: 1234 Howard #2C Returns [SocketSite]
Love the condo, hate the location.
Amen to that. Are you listening, res developers?
Howard itself is pretty crappy and busy, but SOMA in generally is a lot of fun, and ridiculously central.
Surprising outcome; I thought this was going to head in the exact opposite direction and sell for about 550K. This building is obviously a unique design, but for me the poor quality fit and finishes, along with the practical challenges of day to day living in this space present really big obstacles.
As they say however, it only takes one person…Anway, congratulations to all parties involved!
$639K less 6% cash back for “closing costs” that the seller almost certainly had to pay is $600K.
Subtract the tax credits and the buyer likely paid less than the seller. The buyer also got a significantly lower interest rate, so his monthly payments are lower than the seller’s by a wide margin.
Tipster,
How do you get to 13k in tax credits? I thought they were capped at $8k?
Don’t understand how you get 6% in seller-side closing costs either for that matter. Please explain.
Why would (or should) anyone care whether buyer or seller had higher or lower mortgage payments than the other?
For all you know seller paid cash and had zero interest rate.
But even if we take everything you say at face value and seller just “broke even” on a cash basis, they still came out way ahead because renting that condo would have cost a decent sum. Add in tax benefits and seller was getting paid to live there for three years. Considering they bought at the peak this is a huge win for the seller no matter how you slice it.
5% commission + 1% transfer tax is my guess on the 6% seller side closing costs tipster is estimating.
http://www.myfha.net/FHAassistance/closingcosts.html
If you guys think the buyers aren’t getting all 6% back, you’re smoking something. The price gets inflated and the seller does all sorts of things to rebate that inflated price to the buyer.
http://ficoforums.myfico.com/t5/Mortgage-Loans/seller-paid-closing-cost-FHA/td-p/415420
I’ve seen a couple places where the seller increased the list price by 6%, no doubt because they kept getting demands from the buyers to get the 6% “closing” costs.
And $8000 is the credit today: additional tax credits were in effect when the property was sold.
BTW, here is an article from 2009: look at what people were doing with VA loans: No downpayment, no closing costs, and the seller paid off ALL of your other loans, wrapping the whole thing into a tax-deductible, walkawayable mortgage. Honestly, who WOULDN’T have bought a home then?
http://www.trulia.com/blog/robert_chomentowski/2009/01/va_no-no_no_down_and_no_
Tipster: How is the seller potentially paying the closing costs any different than at any time in the past? You could always make an offer like that. Doesn’t mean the seller has to accept it.
Where is your data that shows that “the seller almost certainly had to pay” the 6%?
And what were the other $5k in tax credits that expired in the last couple of weeks?
Obviously the buyers will simply up the bid and demand that the seller pay the closing costs. No reason not to do this.
http://media.ricdizon.com/california-18000-in-combined-homebuyer-tax-cr
Were you really living under a rock and didn’t know that the tax credits were higher?
Tipster,
I sure don’t want whatever it is you are smoking. Tax credits have never exceeded $8k since they were first enacted in 2008.
And as R points out there is absolutely no data to support the notion the seller “almost certainly had to pay” the 6%.
It’s anecdotal of course, but I can’t think of a single instance among anybody I know where the seller picked up the closing costs. Sure as hell didn’t happen in my case. I don’t doubt that it happens in SF from time to time, but I seriously doubt that you could even call it common, let alone the norm.
VA loan for: I heard that SOMA is absolutely flooded with veterans buying designer condos and living high off the hog with the extra $ sellers are giving back to them. Wait.
I understand your first point. But how or why is this any different than at any time in the past? Do you have any data that shows this is more common now than in the past? You state it like it’s a fact that every buyer is doing this. I’d like to know where you got that info, because it’s news to me.
And tax credits, I get it. Forgot the contract date of 4/30 for the Fed.
I stand corrected on tax credits. I honestly had no knowledge about the state tax credit. I guess I have been under a rock.
Seems pretty clear to me that the timing of the sale was Probably designed to take advantage of the overlap between state and federal credits. A 15 day close is about as quick as you can get with the banks right now, so the escrow date makes sense.
And I can see where the price might have gotten inflated a bit as a result…but not for the reasons you say. I’m guessing a more likely scenario is the rush of buyers trying to get in before the double dip window closed (estimates are the CA credit will only last about a month before the funding for it runs out) caused the property to be a bitbmore valuable on 5/1 then it was on 4/30. Given the price I’m going to guess there were a couple bidders, and the highest bid won. A great stroke of luck for the seller and I seriously doubt the seller picked up the closing costs. In that scenario what incentive would there be for the seller to do so?
tipster once again proves that he lives in his own little a fantasy world. in my 7 year career i’ve had two deals where the buyer built in closing costs. meanwhile others on SS say all cash deals are rare but i average 2+ of those a year including one last month. but don’t let facts get in the way of fiction since any apple that sold for more than peak needs a fantastical explanation from the likes of mr. delusion himself.
hey anonn – tipsters really out doing himself now that you’re gone. where the hell are you 🙂
“meanwhile others on SS say all cash deals are rare but i average 2+ of those a year including one last month.”
You’d have to give more context, e.g. how many deals/year do you normally do, and how big are the all-cash deals, etc. Your statement doesn’t refute the claim on its own.
Tipster, we await patiently your back up (you know, some data or something) for:
“closing costs that the seller almost certainly had to pay”